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2 pages/≈550 words
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APA
Subject:
Social Sciences
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Essay
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English (U.S.)
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Topic:
The Use of Knowledge in Society by F. A. Hayek
Essay Instructions:
Assignment: In approximately 500 words, summarize the paper, The Use of Knowledge in Society by F. A. Hayek. Be sure to summarize: • the two ways of economic planning and organization, • the two types of information, • the information needed by the central planner, and • the information needed by the price system. Also consider the following question: • Hayek does not mention the environment in the paper. What connections are there between his arguments and environmental protection? To Submit: Write your summary in a Word document. Save that document to your own files. Go to the “Reading Assignments Tab” for our course in Moodle. Click “Hayek Submission” to upload your work.
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Hayek Reading Summary
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Hayek Reading Summary
“The Use of Knowledge in Society” is an article by economist Friedrich Hayek. The article majors on the importance of information and knowledge in economic planning and organization. The article was published in 1945 where the author delves into the importance of a decentralized market system over centralized planning.
The article starts by highlighting two ways of economic planning; central planning and market system. On the one hand, central planning entails a central authority making decisions regarding the allocation of resources. The central authority uses its comprehensive understanding of the economy to determine how production should be done. On the contrary, the market system allows individuals and firms to be guided by the signals from prices to make decisions. In such a system, decision-making is decentralized.
Hayek continues to introduce the idea of two types of information. These are the knowledge of the given circumstances of time and place and scientific knowledge. The former denotes the knowledge that individuals have about their circumstances and needs. The knowledge is localized and individuals do not need to be experts in any field to possess it. It depends on the particular context which makes it challenging to aggregate and apply it to different circumstances. The latter includes the general principles that experts in different fields have formulated. Scientific knowledge comes from scholars as a result of their work in a particular field. The knowledge can be articulated and aggregated since it is not dependent on context.
The central planner needs context-specific information that the individuals in the economy possess. In this regard, th...
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